Japan: JFE Steel posts 7% y-o-y drop in crude steel production in FY22

JFE Steel - Japan's second largest steel producer - has announced its operational and financial results for the fiscal year 2022 (FY22 - 01 Apr'22-31 Mar'23) on 8 May, 2023.

• Crude steel output: Standalone crude steel output fell by 7% y-o-y to 24.10 million tonnes (mnt) in FY22 as against 25.88 mnt in FY21. However, the same rose by 9% q-o-q to 5.97 mnt in Q4FY22. Consolidated crude steel production also decreased by 7% y-o-y to 25.48 mnt as compared with 27.26 mnt in FY21.
  
  
• Steel product shipments: Standalone steel product shipments edged down by 3% y-o-y to 21.74 mnt compared to 22.38 mnt in FY21. However, the same was recorded at 5.64 mnt in Q4FY22, up 7% q-o-q as against 5.25 mnt in Q3.
  
  
• Exports share in FY22 was 44.5% of the total steel shipments. In Q4, the share stood at 43.6%.
  
  

Financial results

• Profit declined significantly by 43% y-o-y to JPY 235.8 billion ($1.74 billion) in FY22 as against JPY 416.4 billion ($3.08 billion) in FY21.
  
  
• Revenue rose 21% y-o-y to JPY 5,268.7 billion ($39.02 billion) in the year under review.
  
  
• Segment profit amounted to JPY 221 billion ($1.63 billion), down 45% y-o-y.
  
  
• Segment profit in the steel business was JPY 146.8 billion ($1.08 billion), a fall of 55% y-o-y.
  
  

Market overview

• Automobile demand remains strong: Demand for automobiles remains strong and there is large backlog of orders as restrictions on supply of semi-conductors and other components are gradually being eased and the activity levels are expected to improve in the future.
  
  
• Ship-building activity may remain stable: The current level of ship building activity is expected to remain stable over the next two to three years, although material prices are skyrocketing and labour is scarce.
  
  
• Other manufacturing demand flat: In the industrial machinery sector, although machine tool orders are on a downward trend due to the impact of parts and labour shortages, the level of activity is flat due to a backlog of orders.
  
  
• Demand for new housing slow: In non-residential use, large projects such as distribution warehouses and semi-conductor factories are firm, but small and medium-sized projects remain sluggish.
  
  
• Civil engineering demand subdued: In the public sector, budgets are secured at a high level, but there are delays in revising designs due to soaring material prices and labour shortage.
  
  

Outlook:

• The steel major has set its crude steel production target at 25 mnt for FY23.
  
  
• In its "innovation period" from 2030 to 2050, the company aims to develop and implement ultra-innovative technologies for carbon neutrality.
  
  
• The company aims to invest JPY 115 billion ($0.85 billion) over the four years to improve labour productivity by 20%.